Partnership FCU Born

Two Washington-area credit unions, FDIC FCU and National Science Foundation FCU, have merged to form the $105 million Partnership FCU.

The new entity, with 11,000 members and four branches, has been in the talking stages since 2007 and represents "a new direction, a new business model for the small, single-sponsor credit union" particularly for government-linked CUs, said Theresa Mann, president/CEO.
In the current environment, single-sponsor CUs are finding it "more difficult and complex" to grow without achieving back-office economies, said Mann. Such efficiencies for the two CUs can be achieved through the new Partnership brand.

Once the Partnership operation is fine-tuned, she said, her Arlington, Va.-based CU hopes to add more CUs in the Maryland-D.C.-Virginia area.

In a press release, Partnership said, "Both FDIC FCU and NSF FCU are committed to maintaining our high service standards. This new model of 'merger with integrity' combines the strengths of our individual credit unions to help us achieve economies of scale we cannot create on our own."
FDIC FCU, with $70 million in assets, has bank examiners and contractor staff as its principal membership base, while the $35 million NSF FCU serves employees of the National Science Foundation and the U.S. Secret Service.

"We look at this as the beginning of a new kind of credit union that can welcome additional credit unions looking for improved cost efficiencies without sacrificing service or brand integrity," said Mann. Under the restructuring, Lynn Whalen, former CEO of NSF FCU, has been named senior vice president of organization and people development for Partnership.

Eastern Financial Sues Miami Condo Developer

Eastern Financial Florida Credit Union is seeking a $37.25 million deficiency judgment against a Miami developer on a foreclosed condominium.

According to the June 9 Palm Beach Daily Business Review, Merco Group guaranteed the loan on the West Palm Beach, Fla.-based site that would house the condos, which were never built. Eastern Financial foreclosed on the site in December 2008 and filed a deficiency claim judgment in January.

In 2008, the property was appraised at $43 million, the publication reported. Eastern Financial is seeking interest and fees and loan principal. The deficiency judgment, which is the appraised value of the property on the foreclosure sale date minus the total amount owed on the loan, means a borrower must still pay even if the lender has foreclosed. Merco Group said Eastern Financial is not entitled to both the judgment and the property.

"NCUA doesn't comment on pending litigation," said John McKechnie, NCUA director of public and congressional affairs. The agency placed Eastern Financial into conservatorship on April 24.

Merco Group has been sued four times since 2007 over foreclosed properties. Prior to the conservatorship, the Florida Office of Financial Regulation previously told Credit Union Times that it had received some appraisal reports on properties in West Palm Beach and Fort Piece, Fla.

Digital Insight, Andera In Strategic Alliance

Digital Insight and Andera Inc. have entered into a strategic alliance that calls for DI to offer its thousands of credit union and bank customers Andera's online account opening and funding solutions.

DI said it will offer all four levels of Andera's platform, which includes packaged solutions for small community financial institutions and configurable solutions for large customers.

The re-selling agreement includes integration that allows Digital Insight's customers to offer their end users the ability to open and fund new accounts online without reauthenticating credentials or keying in personal information, the companies said.

Andera said its solutions integrate with most core systems and include risk management, reporting, compliance and cross-selling functions, as well as initial funding through credit and debit cards or ACH between institutions.

"The combination of online banking and account opening is a natural one, and with broad overlap already between our existing financial institution customers, integrating our solutions and delivery made complete sense," said Andera CEO Charlie Kroll. His Rhode Island company has about 270 customers, about half of them credit unions.

"Working with Andera helps us arm our clients with yet another important capability to establish and grow a primary financial relationship with new and existing customers," said Glenn Tom, senior vice president of consumer solutions at California-based Digital Insight, part of Intuit.

Card Portfolio Sellers Unhappy With Partners

Credit unions that have sold their card portfolios and entered into agent issuer agreements with their purchasers remain by and large unhappy with their card-issuing partners, according to Asset Exchange. This is the third year the firm has surveyed credit unions that have sold their card portfolios.

"We were interested to see if the state of the economy would alter executives' views regarding their card portfolio sale," commented Frank Selker, Asset Exchange president. "We found little change. Results were very much in line with previous survey responses."

The survey found that credit unions that have sold their portfolios are largely happy with having sold them and with the ongoing relationship with their card-issuing partners. Credit unions surveyed expressed dissatisfaction with their partners' products (43%), pricing (67%) and service (71%), the firm said.

Further, the survey indicated that half of the CUs that sold portfolios are currently evaluating whether to let their card-issuing relationships expire with their current contracts; 19% are thinking of getting back into card issuing; and 48% are evaluating other issuing partners.

The survey found that 20% of card portfolios purchased by other issuers and issued under agent agreements shrank since last year and 24% remained the same size. However, a majority of credit unions surveyed still believed that their partners' card products were superior to credit union card products, but by a smaller margin than last year (76% in 2008 compared to 65% this year).

Conn. Governor Signs Student Lending Bill

A new bill was signed into law by Connecticut Gov. M. Jodi Rell for a student loan program that joins the state and Connecticut credit unions together.

In 2008, officials from Connecticut credit unions met with Gov. Rell to propose a partnership that will provide new and current students with access to higher education. The program offers interest rates at no higher than 6 % or 5.75%. Credit unions offering 6% loans can allow deferment on interest payments for one year, and those offering 5.75% loans may not defer interest payments.

The Connecticut Health and Education Facilities Authority will provide 20% loan guarantees on the loans.

"It is our mission to help people, making credit unions an excellent choice for the program," said Tony Emerson, president/CEO of the credit union league of Connecticut.

The loan program will be open to all students who live or go to school in Connecticut. Currently, 21 credit unions are committed to the program.